How Will the Internet of Things Impact Your Supply Chain?

By 2020, the acronym “IoT” should be fairly commonplace and used by business, organizations, and individuals—all of which will do their respective parts to create the large range of devices that can “speak” to one another. For now, the Internet of Things is an evolving concept, but one that promises to impact the supply chains of many different entities over the next few years.

With Gartner predicting that more than half of new business processes will incorporate some element of IoT by 2020—and that during the same time frame, the number of internet-connected “smart” devices will balloon to 26 billion—the research firm expects this increase to “significantly alter how the supply chain operates.”

Identifying, locating, and determining the status of assets. Global firms recognize the transformational role of IoT, particularly in manufacturing, retailing, and service industries, according to The Internet of Things (IoT) and its Impact on Supply Chain Visibility. In fact, many IoT deployments are already focused on identifying, locating, and tracking the status of assets. According to Forrester, for example, 58% to 77% of surveyed organizations consider locating objects, containers, and personnel as the top fundamental functions of IoT solutions.

Better insights into the whereabouts of shipments. The ability to collect and make visible data at key points in the supply chain is an enabler to improving the customer experience and optimizing supply chain responsiveness. “A pallet on a truck can transmit messages showing exactly what products, sizes, and style variations are included, not to mention the temperature or humidity goods are being transported in,” Zetes Industries (www.zetes.com) reports. “Sensors can even be used to locate the whereabouts of products and staff in large depots and on the road to help calculate the time of arrival. Automated data capture gives real-time visibility of stock and avoids manual counting and human errors.”

Higher uptimes for manufacturing. “One area where supply chain IoT progress can be seen is within production facilities that integrate sensor networks into machinery to increase uptimes, reduce operational cost, and improve overall quality of service,” writes Steve Rice in Where Supply Chain Meets the Internet Of Things, noting that IoT-driven solutions can aid the efforts of mobile and web applications to control real-time operations and visibility by collecting data like temperature and equipment malfunctions. “Photographic instruments can now scan machine components, such as blades, to send alerts for predictive maintenance. Additionally, scanners can check raw materials for traits like paint color, alloy strength, or fabric composition to confirm accuracy before they are used for a finished product.”

Better and more accurate forecasting. According to Rice, IoT data provides critical information to change the way manufacturing and distribution companies understand procurement operations. For instance, transit or retail stock levels can be closely monitored, as well as within 3PL distribution centers and warehouses, so that companies receive advance warning on any shipping errors to reduce data-entry errors and prolonged cycle times. “The collection of data intelligence with pattern analysis over time enables accurate forecasting and intervention should faulty operations occur,” Rice points out. “As a result, inventory planners, production, and procurement managers can be better informed and equipped for executive decision-making on materials to hold, build, or buy.”

More reliable connections between assets and end users. For more accurate sales projections and efficient operations, timing an item's shelf life has become dependent on data. It also requires reflexive and innovative response. “Connecting dynamic, near-real-time end-user interest with sourcing and production is key,” writes Michael Colaneri in IoT in the Supply Chain: Anticipating the Demands of the Future. “It helps to lessen overruns, speed time to market and control costs. The IoT better connects assets and end users. It has become the core of operational value.